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various specialties, including tax incentive investments.
Potential investors were further advised that McIntyre’s
experience in the coal mining business was limited and that
McIntyre’s involvement as a general partner in other mining
partnerships might compete with ERL for McIntyre’s time.
Pursuant to the offering materials, 200 limited partnership
units were available to prospective investors. The minimum
investment was one unit per investor; however, McIntyre possessed
authority to issue fractional units to a maximum of 35 investors.
According to the terms set forth in the offering materials, the
capital contribution for each unit was $190,000. This amount
consisted of $45,000 in cash and a promissory note in the amount
of $145,000 executed by each investor and payable to ERL. The
cash portion of each investor’s capital contribution was payable
in three annual installments. The offering materials explained
that each investor’s capital contribution represented his or her
proportionate personal liability for three recourse notes, which
were to be executed by ERL and payable to JAD, for advance
minimum royalties due during the first 3 years of the lease.
Accordingly, the total capital contribution by limited partners
was designed to equal $38 million.
The offering materials contained a copy of the ERL limited
partnership agreement (agreement). Pursuant to the terms of the
agreement, 99 percent of ERL’s profits and losses were to be
allocated to the limited partners. The two general partners were
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Last modified: May 25, 2011